Correlation Between NYSE Composite and Visa
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and Visa at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining NYSE Composite and Visa into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Visa Class A, you can compare the effects of market volatilities on NYSE Composite and Visa and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in NYSE Composite with a short position of Visa. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Visa.
Diversification Opportunities for NYSE Composite and Visa
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between NYSE and Visa is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Visa Class A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Visa Class A and NYSE Composite is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on NYSE Composite are associated (or correlated) with Visa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Visa Class A has no effect on the direction of NYSE Composite i.e., NYSE Composite and Visa go up and down completely randomly.
Pair Corralation between NYSE Composite and Visa
Assuming the 90 days trading horizon NYSE Composite is expected to generate 3.25 times less return on investment than Visa. But when comparing it to its historical volatility, NYSE Composite is 1.93 times less risky than Visa. It trades about 0.19 of its potential returns per unit of risk. Visa Class A is currently generating about 0.33 of returns per unit of risk over similar time horizon. If you would invest 28,268 in Visa Class A on August 25, 2024 and sell it today you would earn a total of 2,724 from holding Visa Class A or generate 9.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NYSE Composite vs. Visa Class A
Performance |
| Timeline |
NYSE Composite and Visa Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Visa Class A
Pair trading matchups for Visa
Pair Trading with NYSE Composite and Visa
The main advantage of trading using opposite NYSE Composite and Visa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, Visa can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Visa will offset losses from the drop in Visa's long position.| NYSE Composite vs. Awilco Drilling PLC | NYSE Composite vs. AKITA Drilling | NYSE Composite vs. SunOpta | NYSE Composite vs. Delek Drilling |
| Visa vs. American Express | Visa vs. PayPal Holdings | Visa vs. Capital One Financial | Visa vs. Upstart Holdings |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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